Pfizer (NYSE: PFE) is the world's largest research-based biopharmaceutical company seeking out therapies to treat a broad spectrum of illnesses in humans and animals.

Today, let's look at three things investors should be watching regarding Pfizer, as they will provide us with better insight into the company.

1. Pfizer's patent cliff
 The patent cliff is merciless, and it's hitting pharmaceutical companies harder in 2012 than it ever has. This year alone, some $29 billion worth of branded drugs is set to lose patent expiration and be open to competition from generic-drug makers. Pfizer is no different, and, as I opined earlier this year, its patent cliff may be one of the worst of all.

In 2011, Pfizer lost patent exclusivity on cholesterol medication Lipitor, the best-selling drug in the world, which accounted for $9.6 billion, or 14.2%, of its total revenue in 2011. Keep in mind we're talking about a company with well over 100 branded and generic drugs in its portfolio, and one drug amounted to more than 14% of total sales last year! In addition to seeing Lipitor sales begin to landslide down a cliff, it lost glaucoma drug Xalatan last year as well and is set to lose a small army worth of important drugs through 2014, including Geodon and Detrol this year, and Celebrex in 2014. All told, close to one-quarter of Pfizer's revenue stream is at risk of generic competition.

Unlike Bristol-Myers Squibb (NYSE: BMY), which lost the second-best selling drug in the world, Plavix, to patent expiration earlier this year and decided not to pursue any additional marketing of the drug, Pfizer isn't willing to go as quietly into the night with Lipitor. It has chosen instead to market its own generic version of Lipitor to stave off a steep sales decline -- only time will tell if that move is successful.

2. Pfizer's pipeline camels
Pfizer isn't shooting fish in a barrel waiting for Lipitor sales to completely fizzle out; it does have drugs capable of delivering strong growth potential beyond 2014, although it remains to be seen whether they can pick up the $15 billion in slack at jeopardy from generic competition through 2014.

Pfizer's new cash camel is Lyrica, a treatment for fibromyalgia and diabetes-related nerve pain, which has quietly become a $4 billion-per-year drug. Sales of the drug jumped 14% in the second quarter, with international growth demonstrating enormous strength, up 18%. However, Pfizer isn't relying on just one camel to lead to it to water. In addition to Lyrica, sales of ear infection and meningitis drug Prevnar 13 rose by 12% worldwide, with Enbrel and Celebrex tacking on solid gains of 8% and 6%, respectively.

Though much smaller in scale, Pfizer also had some noticeable outperformers in EpiPen, which is used to treat patients with severe allergic reactions, and Sulperazon, a treatment for upper respiratory and urinary tract infections. EpiPen sales jumped by 46% in the U.S., while Sulperazon (which is available only internationally) saw sales rise 45%. Keep your eye on these cash camels as Pfizer attempts to make up for its patent-cliff woes with these FDA-approved drugs.

3. Pfizer's pipeline and potential animal-health spin-off
According to Pfizer's most recent pipeline update in early August, it had 87 (yes, 87!) drugs current in the clinical or regulatory approval stages. That leaves room for a plethora of potential blockbusters and also room for some epic failures.

One pipeline drug in particular that could have massive implications for Pfizer and development partner Bristol-Myers is their oral anti-coagulant, Eliquis. The market potential for the drug is gigantic; however, the FDA has delayed its review on multiple occasions as it seeks more data from Pfizer and Bristol-Myers.

Another drug that was closely watched and is now shelved is Pfizer's Alzheimer's drug, bapineuzumab (a.k.a. bapi). Partnered with Johnson & Johnson (NYSE: JNJ), as well as getting financial backing from Elan (NYSE: ELN), the drug failed to meet its endpoint in two clinical trials. Eli Lilly (NYSE: LLY), which had a competing Alzheimer's drug, solanezumab, also noted that its drug failed to meet its targets in two phase 3 clinical trials, although its drug isn't a complete loss, as it noted positive correlative effects when the clinical data from both trials was combined. Alzheimer's research may just wind up as the next big research boom, so this bears watching.

One final "by the way": Keep your eyes peeled for more details on Pfizer's recently announced spinoff of its animal-health business that it's named Zoetis. Pfizer will be selling up to a 20% stake in the company to help raise around $100 million to pay down debt. The IPO is set to take place sometime in the first half of 2013.

Foolish roundup
Now that you know what to watch for, it should be easier to analyze Pfizer's successes and pitfalls in the future and hopefully give you a competitive investing edge.

If you're craving even more info on Pfizer, I would recommend adding the stock to your free and personalized Watchlist so you can keep up on all of the latest news with the company.

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